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Importance of sources of finance in Sweet Menu Restaurant expansion plans

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Added on  2020-02-03

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MFRD INTRODUCTION 3 TASK 13 1.1 Sources of finance available to business 3 1.2 Implications of the sources of finance4 1.3 Most appropriate sources of finance for Sweet Menu Restaurant expansion plans 4 TASK 25 2.1 Costs of different sources of finance 5 2.2 Importance of financial planning for Sweet Menu Restaurant6 2.3 Information needs of different decision makers in Sweet Menu Restaurant 7 2.4 Impact of sources of finance on financial statements 7 TASK 38 3.1 Analysis of budget and appropriate decision making8 3.2 Calculation of unit costs and

Importance of sources of finance in Sweet Menu Restaurant expansion plans

   Added on 2020-02-03

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MFRD
Importance of sources of finance in Sweet Menu Restaurant expansion plans_1
TABLE OF CONTENTSINTRODUCTION ..........................................................................................................................3TASK 1............................................................................................................................................31.1 Sources of finance available to business................................................................................31.2 Implications of the sources of finance...................................................................................41.3 Most appropriate sources of finance for Sweet Menu Restaurant expansion plans..............4TASK 2............................................................................................................................................52.1 Costs of different sources of finance.....................................................................................52.2 Importance of financial planning for Sweet Menu Restaurant..............................................62.3 Information needs of different decision makers in Sweet Menu Restaurant.........................72.4 Impact of sources of finance on financial statements............................................................7TASK 3............................................................................................................................................83.1 Analysis of budget and appropriate decision making............................................................83.2 Calculation of unit costs and making pricing decisions.........................................................93.3 Assessing the viability of projects.........................................................................................9TASK 4..........................................................................................................................................114.1 Main financial statements....................................................................................................114.2 Comparing formats of financial statements for different types of business........................114.3 Interpretation of financial statements of two restaurant using ratios...................................12CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................142
Importance of sources of finance in Sweet Menu Restaurant expansion plans_2
INTRODUCTION Management of finances is referred to as planning, organizing, directing as well ascontrolling financial activities that relates with the procurement and utilization of funds of thebusiness. It can be meant as application of general management principles to financial resourcesof the organization (The financial plan, 2014). In the present study, management of financialresources has been discussed in context of Sweet Menu Restaurant. The organization is reputedrestaurant that is located in Gants Hill of East London. The present report entails to understandthe financial sources available with the business. Further, it involves implications of finance asresources within the corporation. TASK 11.1 Sources of finance available to businessIn accordance with case, Sweet Menu Restaurant is a reputed business firm that isengaged in offering inter-continental menus at economical rates. A plan has been developed bythe enterprise regarding opening of two branches in Central London and in Croydon. It has beendetermined that outlet needs £300,000 and £500,000 to start up new restaurant at differentlocations. For this, the organization needs to acquire funds from financial sources which havebeen stated as under: Internal sourcesRetained earningIt is considered as a part of profit that is savedfor the purpose of meeting contingencies forfuture (Avlonitis and Indounas, 2005). Suchsource can be used by Sweet Menu Restaurantwith an aim to fulfill its financial needs to asignificant level. External sourcesLong term bank loan Financial institutions are considered as mostsuitable source that offers funds to thebusinesses for particular duration time. With3
Importance of sources of finance in Sweet Menu Restaurant expansion plans_3
the assistance of this, long term needs of newconcern can be accomplished (Bennouna andet.al, 2010). The usage of funds can be donefor the purpose of carrying out businessoperations. Issue of shares It is regarded as an external financial source inwhich firm acquires long term financialresources from the public (Drury, 2009). Thefunds that are obtained by restaurant can beused as start-up capital by the new business. 1.2 Implications of the sources of financeThere are certain implications of the financial sources that are possessed by the newlyformed organization. In situation, when the organization makes use of amount from personalsaving then implication to such relates with dilution of control. This denotes that control over thefunds is lost by the individual which could have been used for the purpose of accomplishingorganizational requirements for future term. Along with this there is an existence of certain implications that can result in situationwhen funds are acquired by new concern from external sources. With the aim to start up newconcern, loan can be taken by Sweet Menu Restaurant. This requires company to keep someassets for security (Eccles and Holt, 2005). In case, when payment of interest is not done withinspecified duration of time then financial institution can take legal actions against the firm. Alongwith this, bank can mortgage assets of the corporation with an aim to recover the amountborrowed as loan. In case, if the recovery of the loan amount is not done from assets thencompany is declared to be bankrupt. Such has huge impact on the credit rating of the firm.Moreover, it results in affecting the goodwill of the business to a significant level (Helliar andet.al, 2005). The funds can be obtained through issue of shares. For this, organization needs tomake timely payment of dividend to shareholders from part of profit. In case of non-fulfillmentof this, legal actions can be taken by shareholders against new concern that can affect its survivalin the market for longer term. 4
Importance of sources of finance in Sweet Menu Restaurant expansion plans_4

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